Fiscal Policy Report Card on America’s Governors 2022

This report grades governors on their fiscal policies from a limited‐​government perspective. Governors receiving an A are those who have cut taxes and spending the most, whereas governors receiving an F have increased taxes and spending the most.

Cato Institute, Oct 12, 2022

The nation’s economy was damaged by the pandemic in 2020, but it bounced back strongly and grew until the end of 2021. The rebound generated a large tax revenue increase for state governments, which also received a flood of pandemic aid from the federal government. The states used soaring revenues to expand their budgets and provide individuals and businesses with temporary or permanent tax cuts.

That is the backdrop to this year’s 16th biennial fiscal report card on the governors, which examines state budget actions since 2020. It uses statistical data to grade the governors on their tax and spending records: governors who restrained taxes and spending receive higher grades; those who substantially increased taxes and spending receive lower grades.

Five governors receive a grade of A: Kim Reynolds of Iowa, Chris Sununu of New Hampshire, Pete Ricketts of Nebraska, Brad Little of Idaho, and Doug Ducey of Arizona. Eight governors receive an F: Tim Walz of Minnesota, Tom Wolf of Pennsylvania, J. B. Pritzker of Illinois, Gretchen Whitmer of Michigan, Phil Murphy of New Jersey, Kate Brown of Oregon, Gavin Newsom of California, and Jay Inslee of Washington.

The report examines the tax and spending choices made by the governors and discusses recent policy trends. Twenty‐​one states have cut individual or corporate income tax rates since 2020, and about 20 states have provided one‐​time tax rebates. Meanwhile, many states have expanded tax revenues from marijuana, gaming, and online sales. Another important trend is the interstate migration of residents from high‐​tax states to low‐​tax states.

Current state budget surpluses may diminish if the U.S. economy continues to stagnate. Fortunately, most states have built large rainy day funds, which they can tap if tax revenues fall in the months ahead. Governors should focus on pruning low‐​value programs from budgets and pursuing growth‐​enhancing reforms such as income tax rate cuts….

read … Full Report

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Hawaii

David Ige, Democrat
Legislature: Democratic
Grade: C
Took office: December 2014

David Ige is a long‐​serving governor. He was previously a state legislator and a manager in the telecommunications industry. Ige has scored poorly on past Cato fiscal reports but finishes in the middle of the pack this time around.

In his first few years in office, Ige proposed and signed into law increases in income taxes, sales taxes, and gas taxes. He also approved a bill creating a higher estate tax rate. However, in 2019, Ige vetoed two substantial tax‐​hike bills. One would have increased taxes on real estate investment trusts, which Ige argued would discourage investment. The other would have raised taxes on vacation rentals, such as Airbnb. In 2021, he proposed a new tax on soda, which did not pass.

In 2022, with the state running a budget surplus, Ige proposed one‐​time rebates for all households, and in June he signed Act 115, which provides rebates of $300 for lower‐​income residents and $100 for higher‐​income residents. The cuts will save residents about $250 million.87